A Cheapskate's Critique of Wine List Prices

Is this going to be another one of those hatchet jobs about restaurant wine prices?" asked Daniel Johnnes, wine director of the Daniel Boulud restaurant group, when I called. "You writers are always complaining about wine prices," he added petulantly. While Daniel, a friend of many years, knew that I was particularly price-sensitive (a.k.a., cheap), the price of wine in restaurants is a topic of interest to many people these days—wine professionals as well as amateurs, collectors and casual drinkers.

One reason may be that there's a lot of information about wine available today, including how much it costs. Anyone with Internet access can find almost any wine and compare a restaurant price to a retail price. And the difference between the two can be substantial—sometimes the first is four or five times as much as the second. And that's not even the full fiscal picture, since most restaurants pay wholesale, not retail prices, adding an even greater margin of profit. And even though there are lots of reasonably priced wines being made all over the world the right now, the problem of overpriced wine lists seems to be growing.

Of course, some restaurateurs say the comparison between their prices and those of a store are invalid, insisting one has nothing to do with the other. Or, as one sommelier put it, "All a retailer does is put wine on the shelf." (This particular sommelier requested anonymity; after all, he may have to buy an occasional bottle of wine in a store.) Restaurateurs argue that they do much more than just display bottles: They maintain inventories in oftentimes-expensive storage locations, support producers too small to get space on retail shelves, offer great glassware and provide an invaluable education to their customers. But at how high a cost?

In Cleveland, at least, it's not very high. In fact, waiters at the popular Italian restaurant Lago will actually recite retail prices of the wines on their list. "We want to be as transparent as possible," explained Lago's wine director, Jim Fink, about this bold move. "The typical style of wine pricing is all about taking advantage of the customer," he added. "We just want people to drink wine. So we try not to charge much more than $15 above retail."

And Fink isn't featuring supermarket specials or off-vintage wines but sought-after bottles from excellent years. For example, his list contains a full page of Brunellos from very good vintages, most priced well under $100 a bottle. The 2001 Caparzo, for example, costs just $11 more than retail ($62 at the restaurant versus an average retail price of $51 at stores), while the 2000 Altesino is only $15 more ($66 on the Lago wine list versus $51). The formula, said Fink, has been a success: "Our wine sales are more than 36 percent of our total sales."

And Lago isn't the only Cleveland restaurant with great deals on wine: Lola (home to F&W Best New Chef 1998 Michael Symon) has quite a few equally fantastic buys, including trophies like the 2001 Araujo Eisele Cabernet Sauvignon for $225 (nearly the winery's current release price!) and the 2003 Sine Qua Non Papa Syrah, priced at a shockingly low $160. This wine generally sells for more than twice that amount in a store—if you can find it. Even I wouldn't look cheap if I lived in Cleveland.

However, I happen to live in New York, where the average restaurant markup on a bottle ranges somewhere between three and four times its wholesale cost—though in some places it's higher, and in other places much less. But it takes time to figure out which places offer the best—and the worst—deals in this town. My own rule of thumb: The more boldfaced names there are at the tables, the bigger the markups will be on the wine. For example, at Manhattan's newest celebrity hot spot, Waverly Inn (owned in part by Vanity Fair editor in chief Graydon Carter), there are not only big bottle markups but also quite a few Bordeaux from less-than-great vintages on the list at less-than-bargain prices. (Bordeaux is one of the most commonly overpriced wines on a list, as its value is invariably perceived to be greater than its cost.) A few of the underachieving, overpriced Bordeaux at the Waverly Inn include a 1994 Château Clinet ($450), a 1994 Lafite Rothschild ($650) and a 1967 Pétrus ($2,050) that was fading five years ago, when critic Robert M. Parker, Jr., warned anybody who had it to "Drink up." (Were the wines from Carter's private cellar? I wondered. Some less-than-stellar gifts from his celebrity friends?)

The night I dined there, I sat with my back to Rupert Murdoch, the media mogul, whom I'm happy to report wasn't taken in by the big-ticket Bordeaux but drank instead a respectable and rather modest bottle of 2000 Bel-Air Pomerol ($100 on the list, average retail price $37). Meanwhile, my friends and I shared the excellent 2005 Lagar de Cervera Albariño ($55 list, $19 retail) and the serviceable 2004 Jaboulet Crozes Hermitage ($50 list, $18 retail), two of the cheapest wines I could find—not that my friends paid much attention. They were too busy scouting for famous faces. Alas, aside from Rupert Murdoch, the only other famous diners that night were Barbara Walters and Ron Perelman.

Of course, it's easy to overcharge people more interested in spotting celebrities than making sure they don't pay too much for wine. One of New York's great bastions of power and influence, the Four Seasons restaurant, operates on a similar principle. Four Seasons diners are more interested in making deals than getting them, and the wine prices reflect that. A bottle of Bonny Doon Le Cigare Volant, a pleasant, commercial California red, costs a cool $80 here (average retail price: $25), though it's a relative bargain compared to the Four Seasons' baked potato: $9.50 (average retail price: less than 20 cents).

And how to find the better-priced lists in New York and elsewhere? Certainly a restaurant that pays as much attention to the food and wine as it does to the rich and famous is a promising start. I'm thinking of places like Les Zygomates in Boston, Monsoon in Seattle and Landmarc in New York City, which just opened a second location in the Time Warner Center. While a bottle of 2000 Louis Roederer Cristal Champagne costs $400 at the Waverly Inn, Landmarc's wine director, David Lombardo, once put the prized tête de cuvée on his list for $169—or $70 less than retail. Lombardo did this because he wanted "people who have never had Cristal before to be able to try it," and he maintained that he will be doing more of the same at the new Landmarc, never mind the policy of pricey neighbors like Per Se (where there is no Cristal on the list, but a bottle of nonvintage Pommery Champagne costs $135 a bottle, or $100 more than its price in a store).

Although Landmarc has moved into one of the city's most expensive spaces, Lombardo insisted he will be keeping wine prices low. How could he do that? After all, most restaurateurs, especially in Manhattan, claim that high rent or big debts force them to charge a lot for their wine—as if customers should feel better knowing that their $60 bottle of Pinot Grigio isn't really a calculated rip-off, but simply a means of amortizing a loan.

I found wine importer Bobby Kacher of Robert Kacher Selections, who is as famous for his strong opinions as he is for his value-priced selections, surprisingly restrained (at least initially) on the subject of overpriced wines. "The restaurant business is very difficult," he noted. "I'm reluctant to blame restaurateurs." He did, however have a scapegoat in mind: "Maybe instead of blaming the restaurants, we should go all the way back to the landlords."

So it didn't really bother Kacher when a restaurant marked up one of his wines four or five times? Even when it was a wine he sold for very little? Kacher's tone changed abruptly. He recalled his recent vacation in Florida, where he was charged $18 for a glass of simple Sancerre. And that wasn't all. "A woman I met at a tasting, who was in charge of the wine at this particular resort, told me she marked up her wines more than four times the wholesale price. I told her I do a lot more work to bring the wines to the market and charge a lot less." He paused. "I told her I wanted to take the money she's making and spread it among the winemakers I buy from." (No report on the woman's response to Kacher's Robin Hood scheme.)

And yet, ultimately, Kacher found the greatest fault with distributors "who take 25 to 30 percent margins" on the wines that he sources and imports and, unlike sommeliers, "do nothing" to educate consumers about his wines. If only he made the kind of money distributors do, his accountant, for one, would be a lot happier. "My accountant would like me to make a 30 percent margin," said Kacher, though he dolefully added, "I probably never will."

Wine directors like to invoke their accountants as well. According to Daniel Johnnes, "Sommeliers please their accountants by buying really cheap wine and selling it for a lot of money." Did he mean that the cheapest wines are actually the worst deals, or the most marked-up bottles? The answers, in order: Perhaps. And yes.

Robert Bohr, wine director of Cru, a New York restaurant with an incredible list (over 4,000 selections), prices his wines according to scarcity. "If it's a simple Albariño or some other wine that's readily available, and it costs us $30, it would be $75 on our list," said Bohr. As far as the really expensive wines were concerned, there was no formula, although they were marked up much less: "You never use multiples when pricing expensive wines," said Bohr decisively. "With expensive wines, the prices become purely arbitrary, done by instinct."

So the expensive wines, marked up much less, were better buys than a cheap, easily replaced Albariño? Sometimes. But not always. If a wine turned out to be really popular, well, the price would go up. "If the wine is $75 on the list and we sell out of it in a week, we'll raise the price," Bohr said. And sometimes a collectible wine will be marked up repeatedly just to keep people from buying it, according to Bernie Sun, wine director for all of Jean-Georges Vongerichten's restaurants. "If you make a collectible wine too inexpensive, it won't stay around for more than a week or two," he added. "When you get a prestigious wine, you want to keep it on your list." So it gets marked up. After all, said Sun, it can take a lot of time and effort to acquire a bottle of 1870 Lafite Rothschild, a wine he treasured so much that he kept on raising the price. But finally, it sold—for $12,000. "We were pretty sad," Sun reported.

Restaurant wine pricing was certainly complicated. I reviewed what I'd learned so far: First, a wine was usually marked up many times at the low end, but less so at the high end. On the other hand, an expensive wine was subject to arbitrary price hikes if the sommelier decided he didn't want to part with the bottle. What was an amateur wine drinker to do? (Besides move to Cleveland.) Was it even possible to tell if a wine list was just expensive or truly overpriced?

For me, one of the fastest ways to tell if a wine list is overpriced is by studying a restaurant's Champagne prices. If the Champagne has been marked up many times, it's a pretty safe bet that the rest of the wines have been, too. And it's easy to memorize a few prices of well-known Champagnes: Most people know what a few common labels (e.g., Veuve Clicquot, Krug and Taittinger) cost at retail, and at least one of those is liable to show up on any given list.

I mentioned my theory to Bohr, who also uses Champagne as his price gauge. Krug multivintage (a.k.a., nonvintage) is his bottle barometer. I decided to use Krug (typical retail price: $125) as well when perusing various wine lists, and I found quite a lot of price variation. Krug seemed to cost the most in Las Vegas and Miami Beach ($437 at David Bouley Evolution), though it wasn't cheap in Chicago, either ($75 a glass at Charlie Trotter's)—although Quince at the Homestead, in Chicago's suburbs, offered it for only $190 a bottle.

Why so cheap? I asked Quince's wine director, Joe Ziomek, who explained that he'd gotten "a small price discount" that he wanted to pass along. (Funny, Charlie Trotter's said the same thing.) Ziomek added that they want to "keep prices within striking distance" of retail. Didn't that mean small profit margins? And what about paying the rent? A big profit wasn't really the point, Ziomek replied. They just wanted the restaurant to be financially friendly and accessible to their regular customers.

Maybe that was why prices in cities like Miami and Las Vegas were so high: Restaurants weren't about customer loyalty or repeat patronage. Besides, in Vegas, tourists are probably too busy winning at baccarat or blackjack to notice (or too depressed by losing to care). Either way, they're not going to ask why a bottle of Ruffino Chardonnay costs $62 (as it does at Rao's) even though its retail price is about $12, or why Krug costs $320 (as it does at Restaurant Guy Savoy). "That's why I hate Vegas," said my wine collector friend Scott Manlin, who visits the city occasionally and tries to bring his own wine to restaurants when he's there.

Restaurant wine prices in Miami make even less sense to me than those in Las Vegas. I can see how a high roller in Vegas might be indifferent to an overpriced Chardonnay, but I don't understand why no one in Miami seems to care. Was everyone on vacation? Addled by the sun?

I asked my friend Nick Ramkowsky, a wine importer who does a lot of business there. "Wine pricing in Miami is just a function of what they can get away with," Nick said. His company, Vine Connections, specializes in Argentine wines. One of Nick's producers is Susana Balbo, who makes some great value wines under the Crios label that generally retail for about $15. And yet the 2005 Crios Torrontés costs a cool $49 at Johnny V in Miami Beach—or five times wholesale. When I told Nick what I'd found, he sent back an impassioned reply: "That's more than outrageous. That should be considered a crime."

Yet the people who live in cities full of overpriced wine lists seem willing to rationalize this fact. My sister, who lives in Dallas, another overpriced wine town, figured high-priced wine is simply "the cost of doing business" in Dallas. When the markup was Texas-sized, she consoled herself with the fact that "at least if you can't finish the bottle, they let you take the rest of it home." (I suggested that, the next time she took away a bottle, she stop at a wine store on the way home to see just how much she might have overpaid. "I don't think I want to know," she replied.)

Of course, unscrupulous restaurants count on this. My sister is far from the only one who would rather not know how much she may be overcharged. My real-estate magnate friend, who divides his time between New York and Florida, acknowledged that he often overpaid for wine but rationalized it this way: "Everyone rips you off anyway." Didn't that pretty much guarantee that he would be? "Probably," he conceded.

Another friend, Willie Norkin, a New Yorker whose extravagances tend most often to taxis and handbags rather than wine, said she didn't mind being overcharged when the restaurant was "someplace with a good ambiance and a good sommelier." At least this last point made sense to me. After all, you aren't just paying for the bottle but also (presumably) for the wine director's expertise.

But how much of a premium should anyone be expected to pay? How much should the care and the carrying of a particular bottle figure into the price of the wine? Not to mention the cost of the glassware or the rent? I don't think good restaurateurs (or for that matter, good wine directors) truly believe their salaries should be tied to how many times the cost of Krug can be multiplied. And while there may be accountants to please and bills to pay, I'd rather not dine in a restaurant where it feels like those are the top priorities. And if I have to sacrifice some ambiance (or certain cities), so be it. A bottle of good Brunello, priced $15 or so above retail, is atmosphere enough for me.

Several sommeliers asked me, rather plaintively, why I thought people paid so much attention to the cost of wine when so many other aspects of the dining experience cost just as much, or were just as marked up. For example, my friend Daniel Johnnes wondered why people don't protest the price of a cup of coffee. "Doesn't anyone care about that?" he asked.

Daniel had a point. A cup of coffee costs maybe a few cents to make. How badly were people being gouged for coffee, anyway? I made one more call. How much was coffee at The Setai in Miami? "A cup of coffee costs $6," the man on the other end of the phone replied matter-of-factly. "Plus tax and an 18 percent service charge."

Comments? E-mail Lettie Teague at winematters@aexp.com.